Everyone is acutely aware of the drawbacks of using or carrying cash in order to obtain goods and services. Cash is easily lost or stolen. Credit cards are not much better than cash, because they too can be lost, stolen, or counterfeited. One of the advantages of using a credit card is that liability to the individual is often limited to a relatively small, predetermined amount (e.g., $50), but only if the loss is realized and reported promptly. Additionally, losses incurred by the banks are passed on to the cardholders in the form of higher fees and interest payments. It is obvious that a better card transaction system is needed.
Most recently, the use of cash cards has had some success, particularly in Europe. Cash cards, however, have similar problems to other credit card systems.
The present invention provides an improved cash card system substantially eliminating the need for using cash that is safer and more convenient to use.
The cash card system of the current invention uses two cards or elements: a cash card that is related to a second, security card. A magnetic stripe, chip, RFID transceiver, or other machine-readable device on or embedded in the cash card contains the requisite information for making a purchase of goods or services at participating retailers. The security card may be presented at any bank or other participating agency to obtain a refund for the cash contained in a stolen or lost cash card. As used hereinafter, the term card is used to apply to any portable financial instrument usable by the owner thereof to obtain goods or services on a basis equivalent to cash. The physical form may be a credit card-like structure or other small, machine-readable object. Each of the two cards of the present invention may be of a different physical form.
At the time of initial purchase of the cards from a vendor, like a bank, the purchaser is provided with a cash card containing an account number and an encoded or encrypted PIN number selected by the cardholder and known only to him or her. The purchaser selects and pays for the monetary value that is then entered into the cash card system. The card containing the selected PIN number and the account number is then activated as an authorization card for the cash card system.
The user purchases a dollar amount for the cash card, which is electronically loaded therein. This procedure is similar to telephone card systems allowing minutes to be pre-purchased. The cash card can also be used to encode the amount used in the course of purchasing goods and services, in another embodiment. The purchaser pays for the electronic cash by cash, check, or electronic transfer of funds. No identification by the purchaser is required to purchase the cash card, thus preserving anonymity. Once the second card is electronically loaded, the user can then use the cash card at any participating sales establishment simply by using the purchaser-assigned PIN to approve purchases (i.e., like a debit card). The user enters the PIN to activate and approve the purchase using the cash card. The approval for the purchase can be verified by subscribing retailers, who swipe the cash card through a card reading machine in order to verify that the PIN number is correct, and to debit the cash needed for the purchase. The amount of the purchase is immediately electronically approved and debited from the cash card. A running balance is maintained for the account held with the issuing bank or agency.
In the event of loss or theft, the cash card cannot be used without entering the proper and correct PIN number assigned by the cardholder at the time of purchase. A refund of the cash remaining in the account may be obtained by presenting the security card to the subscribing issuer and verifying the PIN number contained therein. Therefore, either card is useless without the PIN. People using the cash card system of the invention will be instructed to keep the cards separated upon their person, or to leave the security card at home, in order to foil theft and misappropriation attempts. The PIN number is encrypted and encoded on or in both the security card and the cash card, so it is difficult to determine the PIN without prior knowledge thereof. The security card is used only to retrieve funds from the lost/stolen cash card and in and of itself is useless for obtaining goods or services. This feature keeps others from using the cash card without authorization from the purchaser.
Should the cash card fall into alien hands, its use is prevented by virtue of the need for the correct PIN, which must accompany the use of the card when making a purchase.
In the event of loss of either card, notifying the issuing bank or agency can void each card. A new cash card and/or a new security card with a new PIN can then be issued to the user.
A lost cash card that has been partially used can be replaced with a new card loaded with the remainder of the card fund balance, because a running balance is maintained by the issuing bank or agency. The transaction information at the time of each purchase is recorded so a running balance can be determined after each use of the cash card.
The cash card system of this invention affords persons anonymity and security. The user enjoys the same anonymity and protections of cash purchases without having to carry cash. The user also enjoys the convenience and freedom of card usage (e.g., paying at the gas pump). A user need not apply for credit and is not subject to “hits” on his or her credit records. The government, retailers, or other institutions cannot easily track purchases, card usage, its purposes, or the transaction locations, with respect to a specific individual. However, the individual can keep a running balance of his or her purchases.
Internet purchases are protected because PINs are required when using the card. Because the card system does not require any identification to purchase and/or use the cash card, it further protects a person's identity by maintaining the identifying PIN code separate from the sales transaction. The cash card need not be encoded or encrypted with any personal user information (e.g., name, date of birth, social security number, etc.).
The problem of identity theft is a growing concern for Internet users and consumers. This card system provides electronic purchasing power without revealing any personal information. At the same time, immediate payment to the retailer or seller is ensured.
The cash card system of the invention is designed to clear through an issuer, like a bank, credit union, financial institution, or other commercial agency, where the cash card is purchased. The card may be designed to have either an unlimited or limited life. It can be renewed or “reloaded” upon the payment of additional cash or other transfer of funds. The credit- or debit-type plastic card can comprise a magnetic stripe, RFID device, electronic chip, or other machine readable device. An electronic device (similar to a mini-calculator), displaying the account balance, can also be used as a cash card. The type of card used will depend on the issuer's preference and the amount the purchaser wishes to spend in order to belong to a particular cash card system. Financial institutions will report all cash transactions in excess of $10,000, as required by law. Retailers and sellers will obtain personal information if a purchaser completes a transaction in excess of $10,000, as currently required in regular cash transactions.
The use of traveler's checks is a cashless system similar to the invention. Traveler's checks contain identification numbers identifying the purchaser and the cash amount. Should any one of the checks become lost or stolen, the purchaser can call the issuing bank such as American Express, and obtain a refund. The purchaser is given a receipt with the identification numbers disposed on the checks, and is instructed to maintain the receipt separate from the checks. The system of the present invention incorporates the best features of credit cards, traveler's checks, and cash: the anonymity of cash, the security of traveler's checks, and the convenience of credit and debit cards.